SCI Engineered Materials, Inc. SEC 10-Q Report

SCI Engineered Materials, Inc., a key player in the photonics industry, has released its Form 10-Q report for the second quarter of 2025. The report provides a detailed overview of the company's financial performance and operational highlights, reflecting the challenges and strategic initiatives undertaken during the period.

Financial Highlights

Total Revenue: The company reported total revenue of $3.61 million for the three months ended June 30, 2025, a decrease from $5.53 million for the same period in 2024. For the six months ended June 30, 2025, total revenue was $7.11 million, down from $13.94 million in the same period in 2024. The decline was primarily due to changes in product mix, lower raw material costs, and reduced volume.

Gross Profit: Gross profit for the three months ended June 30, 2025, was $1.16 million, compared to $1.38 million for the same period in 2024. Despite the decrease in gross profit, the gross margin improved to 32.1% from 24.9%, driven by product mix and lower raw material costs. For the six months ended June 30, 2025, gross profit was $2.23 million, down from $2.79 million in the same period in 2024, with the gross margin improving to 31.4% from 20.0%.

Income from Operations: The company reported income from operations of $0.36 million for the three months ended June 30, 2025, compared to $0.59 million for the same period in 2024. For the six months ended June 30, 2025, income from operations was $0.66 million, down from $1.20 million in the same period in 2024. The decrease was attributed to lower gross profit.

Net Income: Net income for the three months ended June 30, 2025, was $0.36 million, compared to $0.53 million for the same period in 2024. For the six months ended June 30, 2025, net income was $0.67 million, down from $1.07 million in the same period in 2024. The decline in net income was primarily due to lower gross profit, partially offset by higher interest income and lower income tax expense.

Basic and Diluted EPS: Basic and diluted earnings per share (EPS) for the three months ended June 30, 2025, were $0.08, compared to $0.12 for the same period in 2024. For the six months ended June 30, 2025, basic EPS was $0.15, down from $0.24 in the same period in 2024, and diluted EPS was $0.15, compared to $0.23 in the same period in 2024.

Business Highlights

Revenue Segments: SCI Engineered Materials, Inc. operates predominantly in the photonics industry, with over 99% of total revenue generated from this sector during the six months ended June 30, 2025. The top two customers accounted for 83% of total revenue, indicating a high concentration of sales within a limited customer base.

Geographical Performance: International shipments constituted only 1% of total revenue for the six months ended June 30, 2025, highlighting the company's predominantly domestic focus.

Operational Challenges: The company is navigating increased political uncertainties, inflationary pressures affecting labor and raw material costs, and supply chain disruptions. These factors are impacting multinational customers and could influence future operational performance.

Research and Development: There was a significant decrease in research and development expenses, attributed to fewer research materials and supplies. The company is focusing on specialty materials for niche markets, including custom applications and additive manufacturing.

Future Outlook: SCI Engineered Materials, Inc. is actively pursuing new initiatives utilizing vacuum hot presses, cold isostatic press, and kilns for increased production and development projects. These efforts are aimed at expanding production capabilities and exploring specialty diffusion bonding processes.

Customer Adaptation: Customers are adapting to external economic and market issues, closely monitoring their inventory levels, and emphasizing intra-quarter shipments to minimize inventory at quarter-end.

Operational Adjustments: The company is maintaining close contact with suppliers and customers, identifying additional suppliers, and adapting to specific customer circumstances and forecasts to mitigate supply chain challenges.

SEC Filing: SCI Engineered Materials, Inc. [ SCIA ] - 10-Q - Aug. 01, 2025